Emerging from the global economic recession, investments in renewable energy technologies continued their steady rise in 2011, with total new investments in renewable power and fuels (excluding large hydropower and solar hot water) reaching $257 billion, up from $220 billion in 2010. In a year marked by falling costs for renewable energy technologies, net investment in renewable power capacity was $40 billion greater than investment in fossil fuel capacity, according to new research conducted by the Worldwatch Institute’s Climate and Energy program.

Total renewable energy investments in industrial countries in 2011 accounted for 65 percent of global investment, increasing 21 percent to $168 billion overall. In contrast, the 35 percent of global new investment that went to developing countries increased 10 percent, to $89 billion. Of that sum, China, India and Brazil accounted for $71 billion in total investment.

Investment in India grew 62 percent - the highest growth rate for any single country over 2010 totals. In 2011, financial new investment in renewable energy installations (a category that excludes small-scale projects and R&D) in industrial countries outpaced investments in the developing world, but in 2010 investments in this category in developing countries had surpassed those in industrial countries for the first time.

A major development in 2011 was the dominance of solar power in technology-specific investments – driven by a 50 percent reduction in price over the year – with $147.4 billion invested in solar compared with $83.8 billion for wind projects and $10.6 billion for biomass and waste-to-energy technology. Although this was not the first time solar surpassed wind in total investment, it was the first time that this involved such a wide margin.

Biofuels, which as recently as 2006 held the second overall ranking in renewable energy technologies, attracted the fourth highest total investment in 2011 at $6.8 billion, followed by $5.8 billion for small hydro and $2.9 billion for geothermal installations.

China attracted $52.2 billion in new investments in 2011, the largest sum of any country. This accounted for nearly 60 percent of the total new investments in developing countries and more than 20 percent of the global total. In terms of the pace of growth, however, the United States scored an impressive 57 percent growth in investment over 2010 levels, outpacing all countries except India’s 62 percent. Overall, the United States ranks second in total national renewable energy investment at $50.8 billion, followed by Germany at $31 billion.

The International Energy Agency projects that 90 percent of the growth in global energy demand during the next 25 years will come from developing countries. Investments in renewable energy already constitute the major part of “climate finance” funds designed to help developing countries meet development challenges.

Significant new investment in cleaner sources of energy will be required to reduce the share of fossil fuels in the world’s total primary energy consumption in order to keep greenhouse gas emissions low enough to maintain the global temperature change within a 2°C warming scenario. According to IEA estimates, $48 billion per year is needed to provide universal modern electricity access by 2030.

“Renewable energy technologies can enhance access to reliable, affordable, and clean modern energy services,” said Evan Musolino, Climate and Energy Research Associate and report co-author. “They are particularly well suited for remote rural populations, and in many instances they can provide the lowest-cost option for energy access. For these potentials to be met, new investment in the sector is essential.”